Making the Most of Investment in an Auto

Let's say that you had $25,000 spare for investment, and a broker told you of one that's one of the most popular in North America. He adds that there's a chance of almost 100 percent that you'll lose at least half your investment, and possibly even more. The broker was talking about an auto. It will likely be the largest purchase you make other than a house, and you should compare cars with before undertaking it. Wine would be a better investment, but you can't drive that. 

The Immediate Costs of an Auto

Purchasing an auto with cash will be much cheaper than using credit. As soon as you make the purchase, other costs begin to arise: insurance, repairs, maintenance, and registering. Per, over five years, you'll spend an estimated $33,604 on that $25,000 vehicle. Cars depreciate at a frightening rate – between around 15 and 20 percent a year, with the steepest drop in the first year and, in fact, as soon as you drive the thing from the lot, whereupon it goes from its retail to its wholesale price. That's one reason to choose a second-hand auto.

Otherwise, as reported, choosing a brand with a high retained value will significantly reduce the cost of ownership. Classic cars can positively appreciate in value, but can also be money pits or even counterfeits.

This situation has, however, improved. In 2011, the New York Times ran an article saying that used cars were retaining more of their original value than was previously the case. It cited the example of Oregon patent lawyer, Spencer Hunter, who made a small profit upon selling his 13-month-old Toyota Prius. Said Hunter, “I drove a brand-new car for free for a year.” Second-hand, fuel efficient vehicles are particularly popular.

Protecting Your Investment

Your auto will keep more of its value if you change the oil and filters every 3,000 miles if conventional oil is used, and every 5,000 miles in the case of synthetic oil: lubrication halts wear on engine components and improves engine efficiency. Checking fluid levels can locate problems before they turn serious. Exhaust systems, suspension, and brakes should also be inspected, which will help reduce the prospect of a catastrophic breakdown. Tires should be changed every 6,000 miles.

A mechanic providing a full service will usually pay closer attention to the actual state of a part than some drive-through oil change specialist, who will be more in thrall to maintenance schedules. Gary Searles, the owner and operator of My Chauffeur of West Palm Beach, FL, said that the best way to find a good mechanic is usually to speak to friends and family, and that advertising should never be believed.

Later Checks

Spark plugs, coolant, brake shoes, pads and transmission fluid should be checked before the warranty expires, which will be somewhere between the 30,000 and 60,000 mile marks, and the process should be repeated after driving that many miles again. The timing belt and water pumps should be changed every 90,000 to 120,000 miles. CV joints should be checked after intervals of between 120,000 and 150,000 miles. If a front-wheel drive auto makes a rhythmic clicking noise during tight turns, it's probably time for a change.

And, Finally…

A car is really an expense rather than an investment, as you probably need one to obtain an income. It can also be a status symbol, reducing the horror of costs. Following the advice above will reduce the expense.

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